BRITAIN’S top share index hit a six-month closing high yesterday, fuelled by banks and commodity stocks, as fears receded over the potential for a messy Greek default in Europe’s debt crisis.
The UK benchmark index ended up 54.01 points, or 0.9 per cent, at 5,782.56, its highest close since 29 July.
Banks rose, with investors cautiously optimistic about the outcome of a meeting of Eurozone finance ministers in Brussels to discuss Greek debt restructuring.
The mood brightened when French finance minister Francois Baroin said to journalists in Paris that a deal with private sector investors about resolving Greece’s debt crisis was taking shape.
“It’s a reminder that, actually, the European sovereign debt crisis isn’t insurmountable,” said Henk Potts, market strategist at Barclays Wealth.
Also aiding banking stocks, said traders, were newspaper reports that France and Germany will call for a relaxation of Basel III global bank capital rules to prevent lending to the real economy being choked off.
But Michel Barnier, European commissioner in charge of financial regulation, said yesterday that he would stick strictly to the implementation of Basel III.
Signs that a Greek deal may be around the corner had a positive knock-on effect on other cyclical sectors, spearheaded by integrated oil stocks, as oil prices rose on an EU ban of Iranian crude imports.
Royal Dutch Shell rose 2.5 per cent, after ING started coverage on the oil major with a “buy” rating.
Traders also cited an improving overall macroeconomic outlook as supportive of commodity stocks, with recent better-than-expected data out of the United States.